WESTPAC GROUP CCIQ PULSE SURVEY OF BUSINESS CONDITIONS - December Quarter 2013 - QUEENSLAND
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QUEENSLAND QUEENSLAND WESTPAC GROUP CCIQ PULSE SURVEY QUEENSLAND OF BUSINESS CONDITIONs December Quarter 2013
SECTION 1
Introduction
The December Quarter Pulse Survey of Business Conditions has
identified good optimism among Queensland businesses as they
12 Month Outlook:
enter 2014.
Australian and Queensland Economies
Business confidence in both the Queensland and national economies
remains at record high levels, with this confidence beginning
to be reflected in other business indicators including general
business conditions, sales and employment. However, profitability
and investment levels remain as significant issues, with external
constraints such as rising input costs, industrial relations legislation,
regulatory burdens and the worsening drought conditions having a
negative impact on businesses’ bottom line.
The outlook for the coming March quarter 2014 remains positive,
with general business conditions, sales and revenue and profitability
all forecast in positive territory.
**Scale – An Index level above 50 indicates that growth prospects are strengthening, while an Index level below 50 indicates that growth prospects are weakening. ***Seasonally adjusted
Queensland Outlook Australian Outlook
Dec-12 Sep-13 Dec-13 Dec-12 Sep-13 Dec-13
Weaker 27 13 18 23 10 15
Same 38 29 31 47 29 32
Stronger 35 58 51 30 61 53
Index 52.3 63.3 58.8 52.1 65.5 60.2
The 12 month outlook for both the state and national economies has fallen from record highs in the September quarter,
but remains at its highest levels excluding post-election spikes. Confidence in the national economic outlook is marginally
stronger than it is for the Queensland economy.
Queensland Economy
• Remaining well in positive territory, the Pulse Business Confidence Index decreased in the December quarter by
4.5 percentage points to 58.8.
• 51 per cent of Queensland businesses expect economic conditions in Queensland to be stronger over the coming twelve months.
“Government spending on infrastructure will help drive confidence in the economy Australian Economy
over the next 12 months” - Survey Respondent, Far North Queensland • The Pulse Business Confidence Index fell by 5.3 percentage points to 60.2 in the December quarter.
• The majority of Queensland businesses expect the national economy to strengthen (53 per cent) over the next 12 months.
“The ramping up of new developments will have a positive effect, as will any
further devaluation of the Australian dollar (which will benefit all exports)”
- Survey Respondent, Central Coast
1
SECTION 1 SECTION 1
General Business Conditions
Survey Analysis:
Factors Affecting the 12 Month Outlook
Queensland businesses are looking towards the Federal Government to deliver on its election promises (namely
the removal of the carbon and mining taxes and significant investment in infrastructure) to help maintain positive
momentum over the coming 12 months. Low interest rates, increased activity within the building and construction
industry and strengthening tourist numbers are also contributing to business optimism in 2014. Generally businesses
believed the falling Australian dollar was having a positive impact; however it has led to reduced profit margins for
importing businesses.
Despite the current optimism, there remain concerns surrounding the downturn in the mining and resource sector,
increasing regulatory compliance costs, rising input costs (insurance, electricity and wages) and global economic
conditions. Industrial relations regulations in particular have been highlighted as a significant constraint on business
and employment growth, specifically penalty rates, anti-bullying requirements and increases in unfair dismissal claims.
Drought conditions in regional Queensland are also having significant ripple effects throughout the economy and for
businesses in the supply chain which will worsen if weather conditions do not improve over the coming 12 months.
General Business Conditions
Dec-12 Sep-13 Dec-13 Mar-14
Weaker 24 27 26 19
Same 40 43 38 38
Stronger 36 30 36 43
Index 52.7 48.9 52.4 56.6
• General business conditions have increased over the three months to December, increasing 3.5 percentage points to 52.4.
This is the first time the index has been recorded in positive territory since December 2012.
“The real estate market has seen much more activity in the last four months which has
flowed directly onto our business. There appears to be much more confidence expressed by • The majority of businesses indicated that general business conditions remained the same (38 per cent) or stronger
(36 per cent) over the December quarter.
many of the small business people whom I associate with which is having positive flow on
• More businesses are positive about general business conditions for the new year, with only 19 per cent forecasting
effects throughout the community” - Survey Respondent, Gold Coast weaker conditions.
• The Pulse General Business Conditions Index is forecast to increase further to 56.6 (seasonally adjusted) in the March
quarter 2014.
“Increasing tourist numbers and skilled migrants will generate growth to stimulate
our economy by increasing activity in the housing market, employment, retail and
education” - Survey Respondent, Gold Coast
“Business having a positive outlook will be influenced by a lower Australian dollar and
“The feeling locally was that a new government was needed. Now that has happened there
regulatory improvements (less red tape). We are negatively impacted by rising costs
is a real change in the air with many feeling positive about the future. Government must
including insurance, fuel and imports” - Survey Respondent, Far North Queensland
now deliver on its election promises” - Survey Respondent, Central Coast
2 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013 3
SECTION 1 SECTION 1
Sales and Revenue Profitability
Sales & Revenue Profitability
Dec-12 Sep-13 Dec-13 Mar-14 Dec-12 Sep-13 Dec-13 Mar-14
Weaker 29 31 29 22 Weaker 36 40 40 26
Same 33 39 32 38 Same 40 41 39 41
Stronger 37 31 39 40 Stronger 24 19 21 33
Index 50 48.8 52.4 55.2 Index 43.8 42.1 43.5 51.0
• Sales and revenue improved over the December quarter, with the Pulse Sales and Revenue Index increasing by • The Pulse Profitability Index remains relatively flat, increasing by only 1.4 percentage points to 43.5 in the December quarter.
4.0 percentage points to 52.4, the first time the index has reached positive territory since June 2012. • Profitability remains one of the most significant issues for Queensland businesses, with 40 per cent of businesses reporting
weaker profit levels.
• The majority of businesses reported steady (32 per cent) or stronger (39 per cent) sales and revenue levels compared
to the previous quarter. • Expectations for an improvement in profitability continue to build, with the Pulse Profitability Index for the March quarter
forecasted at 51.0, with 74 per cent of businesses expecting similar or stronger profitability levels
• More businesses are forecasting stronger (40 per cent) sales and revenue levels in the coming quarter, with only
22 per cent expecting weaker conditions.
• The Pulse Sales and Revenue Index is forecast to increase further to 55.2 in the March quarter. If realised, this will
represent the first two consecutive quarters of growth since 2009.
“A strengthening of sales orders boosted our productivity and whilst profitability
was somewhat stagnant, the increased work load lifted production and working
hours for employees and also generated more turnover for the three month period”
- Survey Respondent, Brisbane
“Our business gets half its sales from Australia and half from global markets. “In our particular industry, the October-December period is traditionally slower.
The drop in the Australian dollar vis a vis the US dollar has had a positive impact on We budget and plan for this drop in activity. We are expecting a very strong
our sales” - Survey Respondent, Brisbane January-June period” - Survey Respondent, Gold Coast
4 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013 5
SECTION 1 SECTION 1
Employment Levels Average Wages
Employment Levels Average Wages
Dec-12 Sep-13 Dec-13 Mar-14 Dec-12 Sep-13 Dec-13 Mar-14
Weaker 28 29 22 19 Weaker 9 10 7 10
Same 56 55 59 61 Same 77 73 75 75
Stronger 16 16 19 20 Stronger 15 16 18 15
Index 45.7 44.9 48.6 49.6 Index 51.7 49.8 52.8 51.4
• The Pulse Employment Levels Index increased by 3.7 percentage points during the December quarter to 48.6. • Wage pressures have increased during the December quarter, with the Pulse Average Wages Index rising 3 percentage
points to 52.8.
• The majority of Queensland businesses are keeping employment levels steady (59 per cent).
• The majority of Queensland businesses (75 per cent) continue to report that wages have remained the same.
• The Pulse Employment Levels Index is anticipated to improve slightly to 49.6 in the March quarter, with 61 per cent • Businesses are predicting wage pressures to remain relatively stable in the March quarter 2014, with the Pulse Average
of businesses expecting to keep employment levels steady Wages Index forecast at 51.4.
“Industrial relations policy must be addressed – penalty rates place an enormous
“High employment costs, less work and more competition are impacting our
burden on our 7 day a week business” - Survey Respondent, Wide Bay
business performance” - Survey Respondent, North Queensland
“We have reduced staff turnover by retaining the staff we want to keep.
The cost of constantly finding new and good staff is now directed towards “A number of factors contained in the Fair Work legislation are a detriment to employers and
rewarding the staff we have retained, which in turn has improved our productivity” any expansion of our workforce. This will also limit potential growth and further development
- Survey Respondent, Brisbane whilst they remain and are enforceable” - Survey Respondent, South West Queensland
6 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013 7
SECTION 1 SECTION 1
Capital Expenditure Regional Analysis
Actual – Sunshine Gold South Central Central Far North
Brisbane North Qld
December Qtr Coast Coast West Qld Qld Coast Qld
12 Month Outlook -
59.3 54.9 62.1 56.0 57.3 60.3 52.3 61.9
Queensland
General Business
51.7 57.9 58.1 48.9 51.9 46.9 45.5 49.1
Conditions
Total Sales/Revenue 51.5 58.6 53.0 52.3 53.7 51.8 50.0 47.3
Profitability 42.9 47.4 = 45.5 = 42.9 47.1 35.9 45.5 39.3
Average Wages 53.3 52.3 = 54.5 54.8 47.7 51.6 52.3 52.7
Employment Levels 48.9 52.8 52.9 40.9 44.2 43.8 47.5 47.3
Capital Expenditure 41.0 51.9 56.8 37.9 41.8 35.4 50.0 39.6
index increased from previous Qtr; index decreased from previous Qtr; = index unchanged from previous Qtr.
Regional Business Confidence:
• All regions have seen a decrease in the record high levels of business confidence seen in the previous quarter, however
Capital Expenditure the 12 month outlook index in every region remains quite positive.
Dec-12 Sep-13 Dec-13 Mar-14 • Business confidence remains higher in the Brisbane, Gold Coast, Central Coast and Far North Queensland regions.
Weaker 38 32 32 31 • The Sunshine Coast and North Queensland regions experienced the largest falls in business confidence during the quarter,
decreasing by 8.5 and 9.1 percentage points respectively.
Same 45 52 47 51
Regional Business Performance:
Stronger 17 16 21 17 • The increase in business confidence experienced in the previous quarter has seen an improvement in general business
conditions in several regions, particularly Brisbane, Sunshine Coast, Gold Coast, South West Queensland and Central
Index 39.5 42.0 43.8 43.1 Queensland regions.
• The Pulse Capital Expenditure Index has increased slightly in the December quarter by 1.8 percentage points to 43.8. • Profitability remains a key issue for all businesses across the state, with the Profitability Index remaining in negative territory
(Index of below 50 basis points) in all regions.
• Only a modest 21 per cent of business respondents reported increased investment in building, plant and equipment; the
majority reported capital expenditure to be the same (47 per cent). • Businesses optimism continues in the coming March quarter 2014, with all regions (except North Queensland) forecasting
positive business conditions.
• Capital expenditure remains relatively low on business priority lists, with the Pulse Index forecast to decrease slightly to
43.1 in the March quarter. Improvement for this indicator is not anticipated until profitability returns.
Sunshine Gold Central Central Far North
Forecast – March Qtr Brisbane SW Qld North Qld
Coast Coast Qld Coast Qld
General Business
56.4 55.8 63.3 54.8 58.7 54.7 43.2 54.5
Conditions
Total Sales/Revenue 55.2 54.6 60.3 53.8 61.0 48.3 43.2 54.5
“Interest rates remaining low will be encouraging for capital investment”
Profitability 49.8 48.7 61.3 52.4 53.0 48.4 40.9 51.8
- Survey Respondent, Sunshine Coast
Average Wages 51.3 47.8 54.8 48.8 53.1 50.0 47.7 53.6
Employment Levels 47.0 48.6 58.3 51.2 52.0 46.7 40.9 50.0
Capital Expenditure 40.2 44.9 56.2 41.9 44.0 43.9 35.8 41.0
“Profitability is down due to rising costs and our inability to recover costs through
price increases. This has resulted in insufficient profit after tax for investment in
plant and equipment” - Survey Respondent, Brisbane
8 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013 9
SECTION 1 SECTION 1
Major Constraints on Business Growth Hot Topic: Queensland Small Business Productivity
The December Pulse Survey of Business Conditions sought views on productivity and the associated challenges faced by small
businesses. Achieving productivity improvements was seen as very important or vital to individual Queensland businesses and the
state and national economies. However more than 80 per cent of respondents believed that the policies and reforms of the state
and federal governments over the past five years have not been conducive to raising productivity.
The majority of businesses (64 per cent) have experienced an increase in productivity performance within their business over the
past five years. These improvements had been achieved through the adoption of new technologies, systems or processes; changes
to the way products or services are produced or delivered; better utilisation of existing staff; improvements to managerial skills; and
greater education and/or training of staff. Key factors influencing business productivity are direct labour costs (not including penalty
rates), costs of utilities including electricity and water, other costs of running a business, compliance with government regulations
and indirect labour costs (including superannuation and workers’ compensation).
Queensland businesses are seeking a stronger commitment from both state and federal governments to productivity reforms.
In particular, businesses would like to see greater improvements delivered in the areas of regulatory reform, taxation reform,
industrial relations, business operating costs and the efficient operation of government.
Areas State and Federal Governments should target to deliver the greatest improvements in
productivity and competitiveness for your business
Regulatory reduction reform/reduce red tape 60.8%
Taxation reform 59.2%
Industrial relations and employment regulation reform 57.6%
Reduce business operating costs 56.8%
Efficient operation of government, including improving fiscal management 55.6%
Taxation incentives and subsidies 50.0%
• The top 5 constraints on business growth remain unchanged in the December quarter, with the level of demand and
Enhancing private sector involvement in government procurement 38.0%
economic activity the number one constraint on business growth.
• Political and economic stability is the second most critical factor for Queensland businesses in the December quarter. Encouraging innovation and R&D 35.6%
Although business concerns surrounding election campaigns and political party leadership have lessened, government Skills and training reforms 32.4%
inability to deliver on election commitments (such as removing the carbon and mining taxes) due to blockages in the Senate
has been raised as a prominent issue that is testing business patience. Banking reforms/improving business access to finance 30.4%
• Rising insurance premiums were the third highest critical issue identified for businesses in the December quarter. Direct Infrastructure investment to reduce bottlenecks 27.2%
and indirect wage costs round out the top five constraints on business growth.
Competition reforms (ie reduced tariffs, increased international competitiveness) 27.2%
• Compliance with industrial relations laws has risen from the eleventh to the sixth highest constraint on business growth in
the December quarter. Businesses believe the pendulum has swung too far in favour of employees, with reforms required to Access to labour (increasing workforce participation, access to skilled migrants) 20%
bring more balance back into the system. In particular, businesses have raised concerns regarding inflexibility, penalty rates,
Other 3.2%
anti-bullying amendments and unfair dismissal.
0 10% 20% 30% 40% 50% 60% 70%
“We have employees who want to work flexible working arrangements and are happy to
forego some penalty payments, but the IR legislation prevents this. We end up with a lose-lose “Previous governments have hindered growth and productivity. It is up to individual
situation. We manage work overflow by bringing in short term labour hire workers, which is business owners to create productivity and efficiencies where possible, under the
not our preference or the preference of our employees” - Survey Respondent, Gold Coast constraints of government policy” - Survey Respondent, Far North Queensland
10 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013 11
SECTION 1
QUEENSLAND
About pulse About CCIQ Become a member of CCIQ
The Pulse Survey has been measuring Queensland business confidence and For almost 150 years, we’ve been taking care of business It doesn’t matter whether you’re a new business or at
expectations for over 20 years and is conducted in conjunction with the Australian in Queensland. the big end of town. Either way, your membership buys
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12 Westpac Group CCIQ Pulse Survey of Business Conditions – December Quarter 2013
CCIQ offices We have regional representatives in offices throughout Queensland, and are affiliated with more than 100 chambers of commerce throughout the state. Brisbane North Queensland Regional Manager Regional Manager Colin Fruk Karen Seal Phone 0409 622 297 Phone 0418 724 112 Email cfruk@cciq.com.au Email kseal@cciq.com.au Cairns and Far Rockhampton and North Queensland Gladstone Regional Manager Regional Manager Karen Seal Victoria Bradshaw Phone 0418 724 112 Phone 0410 220 915 Email kseal@cciq.com.au Email vbradshaw@cciq.com.au Gold Coast and Hinterland South West Queensland Regional Manager Regional Manager Troy Cush Roger Gorrel Phone 0458 422 041 Phone 0429 001 612 Email tcush@cciq.com.au Email rgorrel@cciq.com.au Mackay and Central Coast Sunshine Coast and Wide Bay Regional Manager Regional Manager Victoria Bradshaw Kimberly Lynch Phone 0410 220 915 Phone 0400 731 522 Email vbradshaw@cciq.com.au Email klynch@cciq.com.au For general enquiries, please call 1300 731 988. For the Employer Assistance Line, please call 1300 731 988. Chamber of Commerce & Industry Queensland 375 Wickham Tce, Spring Hill QLD 4000 Telephone 1300 731 988
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